`[Federal Register Volume 89, Number 244 (Thursday, December 19, 2024)]
[Notices]
[Pages 103926-103930]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-30066]


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DEPARTMENT OF THE TREASURY


Agency Information Collection Activities; Submission for OMB 
Review; Collection;

    Comment Request for Trust and Estate Income Tax Returns and Related 
Forms
AGENCY: Departmental Offices, U.S. Department of the Treasury.

ACTION: Notice.

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SUMMARY: The Internal Revenue Service, as part of its continuing effort 
to reduce paperwork and respondent burden, invites the general public 
and other

[[Page 103927]]

Federal agencies to take this opportunity to comment on proposed and/or 
continuing information collections, as required by the Paperwork 
Reduction Act of 1995 (PRA). The IRS is soliciting comments on Trust 
and Estate Income Tax Returns and Related Forms.

DATES: Comments should be received on or before January 21, 2025 to be 
assured of consideration.

ADDRESSES: Written comments and recommendations for the proposed 
information collection should be sent within 30 days of publication of 
this notice to www.reginfo.gov/public/do/PRAMain. Find this particular 
information collection by selecting ``Currently under 30-day Review--
Open for Public Comments'' or by using the search function.

FOR FURTHER INFORMATION CONTACT: Copies of the submissions may be 
obtained from Melody Braswell by emailing [email protected], calling 
(202) 622-1035, or viewing the entire information collection request at 
www.reginfo.gov.

SUPPLEMENTARY INFORMATION:

Internal Revenue Service (IRS)

    Title: Trust and Estate Income Tax Returns and related Forms.
    OMB Number: 1545-0092.
    Form Numbers: 1041, 1041 A, 1041 ES, 1041 ES (OCR), 1041 N, 1041 
QFT, 1041 SCH D, 1041 SCH I, 1041 SCH J, 1041 SCH K-1, 1041 T, 1041 V, 
172, 461, 926, 965 A, 982, 1040 SCH C, 1040 SCH E, 1040 SCH F, 1040 SCH 
H, 1045, 1065 SCH D, 1065 SCH K-2, 1116, 1116 SCH B, 1116 SCH C, 2210, 
2210 F, 2439, 3115, 3468, 3800, 4136, 4255, 4562, 4684, 4797, 4952, 
4970, 4972, 5227, 5329, 5471, 5471 SCH E, 5471 SCH G1, 5471 SCH H, 5471 
SCH I1, 5471 SCH J, 5471 SCH M, 5471 SCH O, 5471 SCH P, 5471 SCH Q, 
5471 SCH R, 5713, 5713 SCH B, 5713 SCH C, 5884, 5884 A, 6198, 6252, 
6478, 6765, 6781, 7205, 7207, 7210, 7211, 7213, 7217, 7218, 8082, 8275, 
8275 R, 8453 FE, 8582, 8582 CR, 8586, 8594, 8609 A, 8611, 8621, 8697, 
8801, 8820, 8824, 8825, 8826, 8829, 8830, 8833, 8835, 8844, 8845, 8846, 
8855, 8858, 8858 SCH M, 8864, 8865, 8865 SCH G, 8865 SCH H, 8865 SCH K-
1, 8865 SCH K-2, 8865 SCH K-3, 8865 SCH O, 8865 SCH P, 8866, 8873, 8879 
F, 8881, 8882, 8886, 8896, 8903, 8904, 8908, 8910, 8911, 8911 SCH A, 
8912, 8918, 8932, 8933, 8933 SCH A, 8933 SCH B, 8933 SCH C, 8933 SCH D, 
8933 SCH E, 8933 SCH F, 8936, 8938, 8941, 8949, 8960, 8978, 8978 SCH A, 
8990, 8992, 8992 SCH A, 8994, 8995, 8995 A, 8995 A SCH A, 8995 A SCH B, 
8995 A SCH C, 8995 A SCH D, 8997, 8582-CR, 8609-A, T, and associated.
    Abstract: These forms are used by trusts and estates to comply with 
their income tax reporting requirement. The data is used to verify that 
the items reported on the forms are correct.
    Current Actions: The burden estimation methodology for trust and 
estate tax is being transitioned from the legacy Arthur D. Little (ADL) 
methodology to the IRS Taxpayer Burden Model. The changes discussed 
above result in a burden hour estimate of 31,900,000 hours, a decrease 
in total estimated time burden of 364,570,339 hours. The newly reported 
total out-of-pocket costs is $5,501,000,000 and total monetized burden 
is $7,573,000,000. The change related to the transition of the burden 
estimate from the legacy ADL model methodology to the IRS Taxpayer 
Burden Model, is a one-time change. In addition, changes are being made 
to the forms to be current with enacted legislation.
    Type of Review: Revision of currently approved collection.
    Affected Public: Trusts and Estates.
    Estimated Number of Respondents: 3,070,000.
    Estimated Time per Respondent (Hours): 10 minutes, 40 minutes.
    Estimated Total Annual Time (Hours): 31,900,000 hours.
    Estimated Total Annual Monetized Time ($): 2,072,000,000.
    Estimated Annual Monetized Time per Respondent ($): 693.
    Estimated Total Out-of-Pocket Costs ($): 5,501,000,000.
    Estimated Out-of-Pocket Cost per Respondent ($): 1,838.
    Estimated Total Monetized Burden ($): 7,573,000,000.
    Estimated Monetized Burden per Respondent ($): 2,531.

    Note:  Total Monetized Burden = Total Out-of-Pocket Costs + 
Total Annual Monetized Time.

Change in PRA Approval of Forms Used by Trusts and Estates

    Under the PRA, OMB assigns a control number to each ``collection of 
information'' that it reviews and approves for use by an agency. A 
single information collection may consist of one or more forms, 
recordkeeping requirements, and/or third-party disclosure requirements. 
Under the PRA and OMB regulations, agencies have the discretion to seek 
separate OMB approvals for forms, recordkeeping requirements, and 
third-party reporting requirements or to combine any number of forms, 
recordkeeping requirements, and/or third-party disclosure requirements 
(usually related in subject matter) under one OMB Control Number. 
Agency decisions on whether to group individual requirements under a 
single OMB Control Number or to disaggregate them and request separate 
OMB Control Numbers are based largely on considerations of 
administrative practicality.
    The PRA also requires agencies to estimate the burden for each 
collection of information. Accordingly, each OMB Control Number has an 
associated burden estimate. The burden estimates for each control 
number are displayed in (1) the PRA notices that accompany collections 
of information, (2) Federal Register notices such as this one, and (3) 
in OMB's database of approved information collections. If more than one 
form, recordkeeping requirement, and/or third-party disclosure 
requirement is approved under a single control number, then the burden 
estimate for that control number reflects the burden associated with 
all of the approved forms, recordkeeping requirements, and/or third-
party disclosure requirements.
    As described below under the heading ``Updated Burden Estimate 
Methodology,'' the IRS's currently accepted burden estimate 
methodology, referred to as the IRS Taxpayer Burden Model, is based on 
taxpayers' tax reporting experience taking into account, among other 
things, the forms and schedules used by those taxpayers and the 
recordkeeping and other activities needed to complete those forms. The 
transition of the trust and estate income tax reporting burden 
represents the IRS's continued effort to improve the ability of IRS to 
measure the burden imposed on various groups of taxpayers by the 
federal tax system. While the improved methodology provides a more 
accurate and comprehensive description of the trust and estate income 
tax reporting burden, it will not provide burden estimates on a form-
by-form basis, as has been done under the previous methodology. When 
the prior model, known as the legacy Arthur D. Little (ADL) model was 
developed in the mid-1980s, almost all tax returns were prepared 
manually, either by the taxpayer or a paid provider. In this context, 
it was determined that estimating burden on a form-by-form, line-by-
line basis was an appropriate methodology. Trust and estate income tax 
returns are increasingly being prepared using software or with preparer 
assistance. In this current reporting environment, in which many 
taxpayers' activities are no longer as directly associated with 
particular forms, estimating burden on a

[[Page 103928]]

form-by-form basis is not an appropriate method of estimating taxpayer 
burden. The IRS Taxpayer Burden Model, which takes into account broader 
and more comprehensive taxpayer characteristics and activities, 
provides a much more accurate and useful estimate of taxpayer burden.
    Currently, there are 153 forms and 27 regulations used by trust and 
estates pertaining to their income tax reporting requirements. These 
include Forms 1041, 1041 A, 1041 ES, 1041 ES (OCR), 1041 N, 1041 QFT, 
1041 SCH D, 1041 SCH I, 1041 SCH J, 1041 SCH K-1, 1041 T, 1041 V, 172, 
461, 926, 965 A, 982, 1040 SCH C, 1040 SCH E, 1040 SCH F, 1040 SCH H, 
1045, 1065 SCH D, 1065 SCH K-2, 1116, 1116 SCH B, 1116 SCH C, 2210, 
2210 F, 2439, 3115, 3468, 3800, 4136, 4255, 4562, 4684, 4797, 4952, 
4970, 4972, 5227, 5329, 5471, 5471 SCH E, 5471 SCH G1, 5471 SCH H, 5471 
SCH I1, 5471 SCH J, 5471 SCH M, 5471 SCH O, 5471 SCH P, 5471 SCH Q, 
5471 SCH R, 5713, 5713 SCH B, 5713 SCH C, 5884, 5884 A, 6198, 6252, 
6478, 6765, 6781, 7205, 7207, 7210, 7211, 7213, 7217, 7218, 8082, 8275, 
8275 R, 8453 FE, 8582, 8582 CR, 8586, 8594, 8609 A, 8611, 8621, 8697, 
8801, 8820, 8824, 8825, 8826, 8829, 8830, 8833, 8835, 8844, 8845, 8846, 
8855, 8858, 8858 SCH M, 8864, 8865, 8865 SCH G, 8865 SCH H, 8865 SCH K-
1, 8865 SCH K-2, 8865 SCH K-3, 8865 SCH O, 8865 SCH P, 8866, 8873, 8879 
F, 8881, 8882, 8886, 8896, 8903, 8904, 8908, 8910, 8911, 8911 SCH A, 
8912, 8918, 8932, 8933, 8933 SCH A, 8933 SCH B, 8933 SCH C, 8933 SCH D, 
8933 SCH E, 8933 SCH F, 8936, 8938, 8941, 8949, 8960, 8978, 8978 SCH A, 
8990, 8992, 8992 SCH A, 8994, 8995, 8995 A, 8995 A SCH A, 8995 A SCH B, 
8995 A SCH C, 8995 A SCH D, 8997, 8582-CR, 8609-A, T, and their 
schedules. For most of these forms, IRS has in the past obtained 
separate OMB approvals under unique OMB Control Numbers and separate 
burden estimates.
    The IRS Taxpayer Burden Model methodology estimates the aggregate 
burden imposed on trusts and estates, based upon their reporting-
related characteristics and activities. IRS therefore will seek OMB 
approval of all 153 trust and estate income tax forms as a single 
``collection of information.'' The aggregate burden of these tax forms 
will be accounted for under OMB Control Number 1545-0092, which is 
currently assigned to Form 1041. OMB Control Number 1545-0092 will be 
displayed on all trust and estate income tax forms and related 
information collections. As a result of this change, burden estimates 
for trust and estate income taxes will now be displayed differently in 
PRA Notices on tax forms and other information collections, and in 
Federal Register notices. This new way of displaying burden is 
presented below under the heading ``Proposed PRA Submission to OMB.''

Updated Burden Estimate Methodology

    The IRS Taxpayer Burden Model methodology revises the estimates of 
the levels of burden experienced by trusts and estates when complying 
with their federal reporting requirements pertaining to income taxes. 
It replaces the legacy ADL model methodology developed in the mid-
1980s. Since that time, improved technology and modeling sophistication 
have enabled the IRS to improve the burden estimates. The IRS Taxpayer 
Burden Model methodology provides taxpayers and the IRS with a more 
comprehensive understanding of the current levels of taxpayer burden. 
It reflects major changes over the past two decades in the way 
taxpayers prepare and file their returns. The IRS Taxpayer Burden Model 
methodology also represents a substantial step forward in the IRS's 
ability to assess likely impacts of administrative and legislative 
changes on trusts and estates.
    The IRS Taxpayer Burden Model methodology focuses on the 
characteristics and activities of trusts and estates rather than solely 
focusing on the forms they file. Key determinants of taxpayer burden in 
the model are the type of trust or estate, the number of beneficiaries, 
level of the trust or estate's income, and the complexity of the trust 
or estate's income generated from assets and investments. Indicators of 
tax law and administrative complexity, as reflected in the tax forms 
and instructions, are incorporated into the model. Tax compliance 
burden does not include a taxpayer's tax liability, economic 
inefficiencies caused by sub-optimal choices related to tax deductions 
or credits, or psychological costs. The legacy ADL model methodology 
primarily focused on the number of line items of each tax form. The 
changes between the old and new burden estimates are due to the 
improved ability of the IRS Taxpayer Burden Model methodology to 
measure burden and the expanded scope of what is measured. These 
changes create a one-time shift in the estimate of imposed burden. It 
is important to note that the difference between the legacy ADL 
estimate and the IRS Taxpayer Burden Model estimate do not reflect any 
change in the actual burden imposed by taxpayers.

Methodology

    Burden is defined as the time and out-of-pocket costs incurred by 
taxpayers to comply with their federal tax reporting responsibilities. 
As has been done for individual taxpayer burden since 2005, business 
entity burden since 2014, tax-exempt organization burden since 2018, 
and employer taxpayer burden since 2023, both the time expended and the 
out-of-pocket costs for trusts and estates are estimated. The IRS 
Taxpayer Burden Model methodology relies on surveys that gather data 
about time and out-of-pocket costs that trusts and estates spend on 
pre-filing and filing activities. The methodology establishes 
econometric relationships between tax return characteristics and 
reported compliance costs. The methodology controls for the 
substitution of time and money by monetizing time and reporting total 
compliance costs in dollars. This methodology better reflects taxpayer 
compliance burden, because in a world of electronic tax preparation, 
time and out-of-pocket costs are governed by the information required 
rather than the form on which it is ultimately reported. Importantly, 
even where various trusts and estates complete the same tax form lines, 
the new methodology differentiates the cost incurred to complete those 
forms based on characteristics of those trusts and estates. Key 
characteristics that serve as coefficients in the trust and estates 
reporting burden model are:

 Type of trust or estate
 Level of income
 Complexity of income and deductions
 Number of beneficiaries

    The IRS Taxpayer Burden Model methodology is based on survey data 
collected using the following stratification for trusts and estates:

                            Form 1041 Strata
------------------------------------------------------------------------
             Fiduciary code                        Income level
------------------------------------------------------------------------
1 = Estate.............................  <$5.
                                         $5-$999.
                                         $1,000-$4,999.
                                         $5,000-$24,999.
                                         $25,000-$74,999.
                                         $75,000-$149,999.
                                         >=$150,000.
------------------------------------------------------------------------
2 = Simple Trust.......................  <$5.
                                         $5-$999.
                                         $1,000-$4,999.
                                         $5,000-$24,999.
                                         $25,000-$74,999.
                                         $75,000-$149,999.
                                         >=$150,000.
------------------------------------------------------------------------
3 = Complex Trust......................  <$5.
                                         $5-$999.
                                         $1,000-$4,999.
                                         $5,000-$24,999.
                                         $25,000-$74,999.
                                         $75,000-$149,999.

[[Page 103929]]

 
                                         >=$150,000.
------------------------------------------------------------------------
4 = Nontaxable Grantor Trust...........  Any.
------------------------------------------------------------------------
5 = Bankruptcy Trust Ch. 7.............  Any.
------------------------------------------------------------------------
6 = Bankruptcy Trust Ch. 11............  Any.
------------------------------------------------------------------------
8 = Qualified Dividend Trust...........  <$5.
                                         >=$5.
------------------------------------------------------------------------
9 = Pooled Investment Funds............  <$5.
                                         >=$5.
------------------------------------------------------------------------
Source: IRS:RAAS:KDA (08-23-2024).


                     Fiscal Year (FY) 2025 Burden Total Estimates for Trust and Estate Income Tax Forms, Schedules, and Regulations
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                     Program change
                                                                  FY23 to 24    Program change due     due to new     Program change         FY25
                                                                                   to adjustment       legislation    due  to agency
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Respondents.........................................    * 19,120,534        (16,050,534)                 0               0        ** 3,070,000
Burden in Hours...............................................     396,470,339       (364,570,339)                 0               0          31,900,000
Monetized time Burden.........................................              $0      $2,072,000,000                $0              $0      $2,072,000,000
Out-of-Pocket Costs...........................................              $0      $5,501,000,000                $0              $0      $5,501,000,000
                                                               -----------------------------------------------------------------------------------------
    Total Monetized Burden ***................................              $0      $7,573,000,000                $0              $0      $7,573,000,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: IRS:RAAS:KDA (11-18-2024).
* FY23 responses per year is a count of all forms and schedules filed under legacy ADL Model methodology.
** FY25 responses per year is a count of all taxpayers under the IRS Taxpayer Burden Model methodology. This approach is also used for OMB 1545-0074
  (individuals), 1545-0123 (business entities), 1545-0029 (employment tax), and 1545-0047 (tax-exempt organizations).
*** Total monetized burden = Total Out-of-Pocket Costs + Total Annual Monetized Time.
Note: Reported time and cost burdens are national averages and do not necessarily reflect a ``typical case.'' Most taxpayers experience lower than
  average burden, with taxpayer burden varying considerably by taxpayer type. Detail may not add due to rounding.

    The following additional breakouts of average burden are provided 
for transparency in understanding the average estimated burden 
experienced by taxpayers. Table 1 shows the average burden by filers of 
Form 1041. Table 2 shows the average burden by total income. Table 3 
shows the average burden by the number of K-1s attached to the Form 
1041.

                            Table 1--FY2025 Average Burden Projections by Entity Type
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                                                                                                      Average
                 Entity type                   Percent of filed    Average time   Average out-of-    monetized
                                                 Form 1041 **         (hrs.)       pocket costs       burden
----------------------------------------------------------------------------------------------------------------
Simple Trust................................                  17               9          $1,300          $1,900
Complex Trust *.............................                  54              11           1,900           2,700
Decedent Estate.............................                  12              18           3,300           4,400
Grantor Trust...............................                  16               8           1,100           1,400
Qualified Disability Trust..................                   1               8             800           1,200
Pooled Income Fund..........................                  <1              10           2,700           3,200
----------------------------------------------------------------------------------------------------------------
Source: IRS:RAAS:KDA (11-18-2024).
* The category of Complex Trusts includes Chapter 7 and Chapter 11 Bankruptcy Estates.
** Percentages based on Tax Year 2022 filings. Detail may not add to total due to rounding.


                          Table 2--FY2025 Average Burden Projections by Total Income *
----------------------------------------------------------------------------------------------------------------
                                                                                                      Average
                          Total income                             Average time   Average out-of-    monetized
                                                                      (hrs.)       pocket costs       burden
----------------------------------------------------------------------------------------------------------------
                                             Table 2A--Simple Trusts
----------------------------------------------------------------------------------------------------------------
1. <$1..........................................................               8            $800          $1,200
2. $1 to $5,000.................................................               8             800           1,200
3. $5,001 to $10,000............................................               7             900           1,400
4. $10,001 to $50,000...........................................               7           1,200           1,800
5. >$50,000.....................................................              11           2,500           3,700
----------------------------------------------------------------------------------------------------------------
 Table 2B--Complex Trusts, Qualified Disability Trusts, Pooled Income Funds, Chapter 7 and 11 Bankruptcy Estates
----------------------------------------------------------------------------------------------------------------
1. <$1..........................................................               8           1,100           1,400
2. $1 to $5,000.................................................               9             900           1,300
3. $5,001 to $10,000............................................               8           1,200           1,700
4. $10,001 to $50,000...........................................               9           1,700           2,400
5. >$50,000.....................................................              18           4,600           6,400
----------------------------------------------------------------------------------------------------------------

[[Page 103930]]

 
                                           Table 2C--Decedent Estates
----------------------------------------------------------------------------------------------------------------
1. <$1..........................................................              16           2,500           3,400
2. $1 to $5,000.................................................              18           2,300           3,000
3. $5,001 to $10,000............................................              18           2,900           3,800
4. $10,001 to $50,000...........................................              18           3,700           5,000
5. >$50,000.....................................................              21           6,000           8,000
----------------------------------------------------------------------------------------------------------------
Source: IRS:RAAS:KDA (11-18-2024).
* Grantor trusts are not reflected in this table because income from a grantor trust is generally reported on
  the grantor's tax return.


                     Table 3--FY2025 Average Burden Projections by Number of K-1s Attached *
----------------------------------------------------------------------------------------------------------------
                                                                                                      Average
                         Number of K-1s                            Average time   Average out-of-    monetized
                                                                      (hrs.)       pocket costs       burden
----------------------------------------------------------------------------------------------------------------
                                             Table 3A--Simple Trusts
----------------------------------------------------------------------------------------------------------------
0...............................................................               9          $1,000          $1,400
1-5.............................................................               8           1,300           1,900
6-10............................................................              13           2,300           3,300
>10.............................................................              17           3,300           4,700
----------------------------------------------------------------------------------------------------------------
   Table 3B--Complex Trusts, Qualified Disability Trusts, Pooled Income Funds, Ch. 7 and 11 Bankruptcy Estates
----------------------------------------------------------------------------------------------------------------
0...............................................................               9           1,200           1,600
1-5.............................................................              11           2,200           3,100
6-10............................................................              20           4,300           6,100
>10.............................................................              26           5,800           8,100
----------------------------------------------------------------------------------------------------------------
                                           Table 3C--Decedent Estates
----------------------------------------------------------------------------------------------------------------
0...............................................................              14           2,400           3,300
1-5.............................................................              20           3,800           5,100
6-10............................................................              25           5,400           7,300
>10.............................................................              32           7,500          11,000
----------------------------------------------------------------------------------------------------------------
Source: IRS:RAAS:KDA (11-18-2024).
* Grantor trusts are not reflected in this table because they do not use Schedule K-1s. See Instructions to Form
  1041, https://www.irs.gov/instructions/i1041.

    Authority: 44 U.S.C. 3501 et seq.

Melody Braswell,
Treasury PRA Clearance Officer.
[FR Doc. 2024-30066 Filed 12-18-24; 8:45 am]
BILLING CODE 4830-01-P`